tv Meet the Press NBC December 14, 2009 3:30am-4:30am EST
roger browberger stepped up to do the right thing. -- captions by vitac -- www.vitac.com this sunday, a special focus on the economy. >> our work is far from done. >> is this a jobless recovery? >> even though we reduced job losses, relative trickle, we are not yet creating jobs at a pace to help all those families who have been swept up in the flood. >> more than 7 million jobs lost since the start of the recession, unemployment at the highest level in 26 years. is the president's new jobs package the answer? our guest white house economic adviser dr. christina romer, then the road ahead, where will
the new jobs come from? what will get businesses hiring again? is the economy headed for another down turn before it recovers? a special discussion with former chairman of the federal reserve, alan greenspan. the host of cnbc's "mad money" jim cramer, democratic governor of michigan, jennifer granholm, and mitt romney, former governor of massachusetts, and presidential candidate in the 2008 campaign. our "meet the press" minute. president obama on the world stage accepting the nobel peace prize while at the same time leading a nation at war. >> i know there's nothing weak, nothing passive, nothing naive in the creed and lives of gandhi and king. but as a head of state sworn to protect and defend my nation, i cannot be guided by their examples alone. >> the reverend martin luther king jr. appeared on this
program one year after he received the the nobel peace prize and talked about his commitment to nonviolence in the face of injustice. >> first, we're joined by white house economic adviser dr. christina romer. welcome back to "meet the press." >> great to be here. >> the president taking stock of his first year in office, and an economy still very much in turmoil. he spoke in his weekly radio address yesterday and talked about who ultimately is to blame. he had tough words for wall street. let me show you. >> even as we dig our way out of this deep hole, it's important that we address the irresponsibility and recklessness that got us into this mess in the first place. much of it was due to the irresponsibility of large financial institutions on wall street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long term consequences. >> is wall street to blame as
the president suggests? >> you know, i think there is a lot of blame to go around but absolutely we know some of the practices that happened on wall street did set us up for what was a severe financial crisis. we're all paying the price for what went on. >> is the reality the price jobless recovery? >> the reality so far has been is a very severe recession. and that is what we have been fighting against, the drying up of credit, absolutely has had a tremendous impact on main street. and particularly big impact on jobs that we've lost more jobs even than you would have normally predicted given what's happened to gdp. i want to emphasize how much things have changed. you go back to this time last year we were losing half a million jobs a month. in january 700,000 a month. what we learned we're holding flat unemployment. that's not good enough, we want to be having robust job growth
but it certainly is a big change. >> wall street for a second. the house passed financial reform, sweeping financial reform. had these rules been in place would it have prevented the financial crisis? >> that is certainly the goal as we're setting up financial regulatory reform, exactly to do what franklin roosevelt did in the 1930s, give us a rules of the road that will protect us, that one protected us about 80 years. >> would it have worked? would it have prevented the crisis? >> we are certainly i think you know, you can never say for sure. i think it's a much better set of rules of the road. as we're going forward and working with the senate and finally getting a bill there are things we can improve and strengthen. it's absolutely a much better set of rules of the road. >> the president said in an interview on another network that wall street still doesn't get it. goldman sachs decided instead of paying out big cash bonuses that they were going to do all of that in stock. is that an improvement or do they still not get it? >> i think it certainly is an improvement. you know, there is just a
fundamental disconnect, right. we now, you know, the american people had to take extraordinary actions to back up wall street, it was the right thing to do because we are all linked to that. but you know now wall street's doing a lot better and main street is still suffering. so, you know, that's why the president is going to have the bankers in tomorrow. we're going to talk about a lot of things like what are the responsible actions they can take to get lending going again, to small businesses, to deal with compensation practices that encourage risk taking, to make sure that responsible homeowners can stay in their home. those are all things we're going to talk about. >> when they come to the white house the president sounds like he's going to be blunt saying you're part of the problem. >> i think he is going to say you're going to be part of the solution, we're going to do everything we can, you have to do everything responsible that you can. >> you talk about the disconnect between main street and wall street though that's a bit of a misnomer. the two are connected in terms of the credit flow. just because wall street is doing well, and executive rules that went into place this week,
where you have top employees capped at $500,000 in the companies that got the bailout money. is the goal here to simply punish wall street? >> the goal has certainly got to be that as we go forward we have a system that's more efficient, that works better for the american people, that doesn't get us into this messenger. i think the other thing we have to talk about is making sure that the american taxpayer is made whole, right. that we have had to take extraordinary actions, the t.a.r.p. legislation that was so crucial in shoring up our financial system. i think the president feels very strongly that the american people have to be held harmless. >> these companies even if they get bailout money to be profitable, to return to profitability without impingement on their competitiveness? >> of course we want them to return to profitability. we want them to return to lending, to doing as you described, they are linked, the circulatory system of our economy. we know that's important. >> let's -- i want to talk about jobs more specifically. a lot of focus on getting people
back to work. how long before unemployment falls below 10%? >> well, you know, we were very encouraged last -- the last jobs report when we saw the unemployment rate tick down. again, i got to emphasize how the change that we've seen, say, in gdp growth where we were plummeting at the first quarter we're now growing again. i'll tell you what most private forecasters tell us that gdp is going to grow, accelerate, most are talking about positive job growth sometime in the first quarter. so, what usually happens is gdp grows, then employment starts to grow, then finally the unemployment rate starts to come down. >> does it get worse before it gets better? >> these things certainly do bounce around. i would anticipate some bumps in the road as we go ahead. >> might go up again before you think it comes down. >> it could well. especially if you talk to a lot of the analysts, what they say is actually once we start to recover, the chance that some of those 7 to 10 million people
that have become discouraged, dropped out of the labor force, they may come back in. that would cause it to go up a bit. but then once we're firmly growing again, once employment growth is coming again we'll see the unemployment rate start to come down. >> when is the recession over, do you think? >> you know, those official definition, that talks about just when do you turn the corner, when do you go from plummeting to finally starting to go back up. i think we have at least in terms of gdp reached that point. what i think the president's said and what i firmly believe, you're not recovered until all those people that want to work are back to work. >> in your mind this recession is not over. >> of course not. we have, for the people on main street and throughout this country, they are still suffering. the unemployment rate is still 10%. that's why the president was talking this week. he wants to get it down. >> the unemployment picture has been grim for a long time. the predictions were dire a year ago. jared bernstein as you know the economic adviser to the vice president said this in december of 2008. we'll be lucky if the
unemployment rate is below double digits by the end of next year, this is '08. even if the economy improves the growth won't be enough to rehire laid off workers much less absorb those coming into the labor force. kiplinger in february of this year had this report. we know what a jobless recovery feels like but this one will be more painful. it will take a recovery in automobiles, housing for the manufacturing sector to once again pros sfer, that according to chairman of the institute of supply management manufacturering in a survey done. and prospects for rebounds are dim until 2010 or beyond despite the efforts to stimulate the economy. the warnings were there. why didn't this administration, this white house, attack unemployment sooner? >> well, first of all i will tell you in the first month of taking office, we passed the biggest, boldest fiscal sometime youless package in history. we had a comprehensive rescue package, a housing package. we hit this with as much as we
could get through congress and as well as we could do. >> you thought that would keep unemployment to 8% and it didn't work. >> i will be the first to say i didn't have a crystal ball. certainly i think what we -- >> you asserted you did in the reports suggesting it would keep to the 8% if passed. there was an attempt to forecast. >> of course people have to forecast. i'm saying not having a crystal ball i don't know the future. we're making an educated estimate. the fundamental thing is that the first quarter of this year no question was worse than basically anyone anticipated. and that this economy did really come to the edge of the cliff and start to go over and precisely because of the actions we've taken we have walked it back. the important thing, though, is over the summer, the fall, we've continued to take action. we had the cash for clunkers program. that's what the president was talking about this week. what are the other steps we can do, the appropriate actions at this point. >> would have the had more of an effect on the economy if the stimulus money had been released
sooner, only about 20% of the money has been released. >> you've got to be so careful because think about all of the -- about a third of the fiscal stimulus was a tax cut. that went into effect almost immediately. a big chunk was aid to people directly hurt by the recession, the unemployment insurance, cobra, aid to the states, that went out almost immediately. we always knew that the part that would take longer is the direct government investments and smart energy, those have been going out quickly but they were also always part of the plan for 2010 because we knew this was a very severe recession, would take time to fix it. >> in the initial discussions about stimulus you advocated a largeer stimulus, at least 1.2 trillion. that figure was never taken to the president. was that a mistake? >> the president certainly knew that this was a very severe recession. i remember going back and looking at my notes. we had a meeting with the president on december 16 last year. i remember what i said was conditions are grim, and deteriorating fast. he knew that this was serious, he knew that we were all --
>> the size of the stimulus, do you think it should have been larger? you thought that at the time. was it a mistake not to take that larger figure to him? >> no. we were talking about the range of options and all public policy is a mix of what are the possible effects and what can you get through congress. i feel confident we got the best package that we could through the congress. >> now you're talking about another package getting through congress, the idea something that would specifically stimulate job growth. there has been discussion of even using that bailout fund, the t.a.r.p., to pay for this. the "l.a. times" pushed back hard against this idea in an editorial. i'll put it on the screen. the administration should explain why the massive amount of money already approved to stimulate the economy isn't sufficient. after all most of it hasn't been spent according to the administration's recovery website only 20% of the nearly 800 billion has been handed out as of october 30. and if more funds are necessary the administration should find a way to raise them without exacerbating the federal deficit
which at 1.4 trillion in the fiscal year that ended october 31. the idea of converting bank bailout funds into jobs programs might have populous appear but the t.a.r.p. dollars aren't new revenue. they are borrowed money and we should be thankful we can pay so much of it back. >> what the president said we inherited two problems. huge jobs deficit and one that was growing, and a huge budget deficit and one that was growing. what he said is we absolutely have to attack both of those. on the jobs side, everybody knows you're never going to get your budget deficit under control if you don't get the economy growing again. that's why what he's talking about is not just government trying to get people working, it's the government helping to jump start the private sector. we know that's what has got to happen. on the fiscal side we know that the actions that we take are likely to be more effective if people have confidence that we will get that long run budget deficit under control. and that is what the president is committed to doing, i got to tell you he has shown that commitment in the debate on the
floor of the senate on health care. he has been the most passionate advocate for cost containment. that is a crucial step we can take right now to get the budget deficit under control in the long run. >> is it still his view essentially the government must spend its way out of the recession than attack the deficit? >> he has never said -- what he has said in his speech is that now at this stage in the recovery process, some targeted actions like investing more in infrastructure, in tax incentives for small businesses to hire and to invest, for incentives, say, to get homeowners to retrofit their homes, those are targeted actions we can take now that can help to jump start the private sector. >> government spending is necessary before attacking the deficit. >> it's a parallel process. at the same time we're taking important actions to put people back to work right now, which is good for the deficit, we also are going -- >> not addressing how it's paid
for. are taxes going to have to go up to pay for another government sometime you sflus >> what we're going to be doing -- the news we got on the t.a.r.p., no one's talking about taking the t.a.r.p. and literally using it for infrastructure t. the fact that we discovered that we through good stewardship are going to have low eer loss going back to the federal treasury tellings us there is the space to do what we have to do. one in 10 are out of work at this point in time. >> dr. romer, my question is will taxes have to go up for the government to pay for additional stimulus? >> what is absolutely true is as we look, first of all no one's talking about raising taxes in the middle of a serious recession. that would just be bad policy. >> how are you going to pay for it? use t.a.r.p. money? how do you pay for it? >> looking at the -- everyone knows that in the middle of a crisis you don't do a major fiscal consolidation. that would be suicide. that's not what you do for an economy that is struggling to come back from the worst
recession in post-war history. but what the president is committed to is putting forward a plan for getting that deficit under control in the medium and the long term, health care reform is part of. we have to work with congress, it's going to have to be a bipartisan effort. we inherited a huge problem. it's not -- it was years in the making. we're going to have to, you know, be the responsible people and stepp and deal with it. the president is absolutely committed to doing so. >> by this time next year where will unemployment be in your view? >> i feel confident it will be on the way down, as i said we've talked about how there will likely be further rises before it comes down. what i feel confident is that we're on the right trajectory and i think what the president is committed to is doing all that we possibly can so that number comes down much more dramatically. that is ultimately what we have to do. >> when do you expect you will
be able to say the recession is over? >> i'm not going to say the recession is over until the unemployment vat down to normal levels. >> which would be? >> again, are you asking me, timing? >> what is a normal level? >> the normal, where we were before the recession, sort of in the certainly in the 5% range, that is what americans are used to. >> can that be accomplished in a year's time? >> i think we're -- it's going to take -- this recession took a long time coming. it's going to take a long time coming out. we can make incredible progress. we can get that unemployment rate coming down, you know, the whole key is not just growing again, we've got to grow robustly. that's how you get a lot of job creation, a lot of progress on the unemployment rate. >> dr. christina roam e continued good luck with your hard work. >> congratulations on your first year anniversary. >> thank you. up next, when and how will all of the americans searching for jobs get back to work? our special discussion continues
here on jobless recovery. alan greenspan, governor granholm and mitt romney and jim cramer. war and peace on the world stage for president obama. and the connection to this "meet the press" guest in 1965. one year after his nobel prize win only on "meet the press." to do business on a smarter planet... ...you need to open your business to the world. invite customers into the design process. work with people far outside the firewall. collaborate with business partners... get insights from suppliers anywhere... unlock knowledge from our supply chain. smarter technology means the choice... ...between being open... ...and being secure isn't a choice anymore. i can have both. helping to secure an open world. that's what i'm working on. i'm an ibmer. let's build a smarter planet.
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we're joined by jim cramer and former chairman of the federal reserve alan greenspan. as well as michigan governor jennifer granholm and former massachusetts governor mitt romney. great to have all of you here today. it's an important discussion, this focus on jobless recovery. dr. greenspan, there are mixed messages from the white house economic team. larry somers says everyone agrees the recession is over. dr. romer saying not so fast. this will not be over until we're out of this jobless recovery. what do you say? >> those are two separate concepts. an economist will say the recession is over because what is measured is what's happening to economic activity and it's very obvious certainly in retrospect that the bottom was in july, maybe even june. there's a different issue, however, is when the economy is restored to normal, and that's what the president's talking about.
in other words, merely having gotten by the bottom is not all that terrific because by definition at the bottom is when things are worst. worse off. and the result is that you still have a long way to go before you get more normal characteristics in economy. that's what the president was talking about. >> jennifer granholm, governor granholm in michigan, i don't have to tell you how hard the situation is with over 15% unemployment in your state. is this a jobless recovery? >> you know, david, this week i was at the announcement of the volt vehicle, the new general motors vehicle that's going to be an all electric plug-in, in the boundaries of the city of detroit. that would not have happened were it not for the obama administration and the commitment that they made to the auto industry, new technologies to make the electric vehicle. so, those jobs, you better
believe for those people who work on that line whose jobs are now safe and will be there for a while, it's not jobless. but for the 15.1% of michigans, they are looking. as governor of the state with the highest unemployment rate in the nation who has been disproportionately affected by the restructuring of the auto industry, it would have been so much worse if we didn't have an administration that cares about manufacturing, that cares about having an auto industry. these companies would have been liquidated. >> governor romney, why is it that companies are not inve investing, not hiring? >> companies are going to hire if there are additional purchases that require them to staff up and beef up and start production lines. people have to be buying things. unfortunately, what the president created with his 780-plus billion stimulus plan grew government but not the private economy. in fact in some respects the
work that's been done by "the washington post" recently points that out, it shows that there's ten times as much spending per person in the washington, d.c. area as there is in the nation at large. this is not going to be a jobless recovery, the economy will come back, the private sector will grow again. but it has been a jobless stimulus. and that's unfortunate because the president had an opportunity to focus on the economy, to create jobs but instead nancy pelosi and harry reid created something that stimulated government. >> it's interesting, some people would hear that and say it's a partisan view, jim cramer. the reality is there are people who say what if you got this stimulus to take effect soonering got more than 20% of the money paid out. the president this week said that republicans seem to be rooting for failure yet it was republicans who at the outset of the stimulus debate said what about a pay roll tax holiday, do something to prime the economy faster. >> i don't think that -- when i talk to ceos and i talk to dozens of them for my show, no
one has seen it. i keep asking where's the money? have you seen money from washington? even companies that are involved with road building, the most elementary aspect of any sort of stimulus are saying no, this is the first quarter that we may have seen a trickle. so i agree with you, the stimulus is not helping create jobs. that's not republican or democrat. i just don't see anything beyond municipal and state worker compensation. >> dr. greenspan, let's stay on this issue of jobs. historical perspective, there is a chart we'll show but let me set it up, which compares the depth of job loss in this recession, to that of the recession in 1981 to 1983. let's put that graphic on the screen and you can see it. the red line, 81-83, and the black line is 2000 to the present. the end point on the graph, on the right, shows that at this point in the recession in the early '80s you would see a return to almost not 100%
employment but back to where it had started. that's almost a "v." you look at the depth and the duration of this recession, and the job loss, it's a much darker picture. what does that say to you about what recovery is going to look like and how long it's going to take for unemployment to come down below 10%. >> well, first of all, the reason that we're looking at such a disparate difference is that in the current period it's very apparent to me that business got very frightened when the crisis occurred and presumed that the economy was going to go down far more sharply than it actually did. indeed i think dr. romer was making much the same point. what this means is that we have a level of employment at this stage which is barely adequate to staff the level of output, and that it seems to me virtually inevitable if nothing else were to happen that
employment would start to come back fairly quickly. that's not the same thing as saying that the unemployment rate is going down. for two reasons. one, it takes 100,000 a month of employment increase just to stay even. but in addition as dr. romer pointed out, as the economy improves, you're going to get a number of people who are not seeking jobs, meaning they are not in the labor force, who will now start to come back and that will make the hurdle as to bringing the unemployment rate down, quite difficult. >> is that to say you think unemployment goes up before it ultimately comes down? >> i don't know. but what really concerns me, david, is that 38% of the total unemployment are those unemployed more than 27 weeks and indeed, a significant part of that is a year or more. these people are losing their skills, and it is very critical
that those people have the skills when the economy comes back or we will not be as productive as we'd like to be. >> governor granholm, that gets to a point i talked to people, you know, on my staff and outside, about what jobs are coming back? how much are these jobs going to pay? are they going to be the same kinds of jobs, or as dr. greenspan suggests because of the skill disparity they are not going to be very good ones. >> well, i think it's very clear these are not going to be the same kinds of jobs. there is no doubt that -- i mean i give you my michigan perspective on this. but the traditional manufacturing jobs which have repetitive motion, we know that a lot of those have gone to india, to china, to asia. but we know, we also need the investment in the level of skill as dr. greenspan said. i have a prop. so, this is today's detroit free press which i was reading. this is a fellow who runs --
used to run an auto supply company and now they are making wind turbines. and the workers who were auto workers are now making wind turbines and they are all employed. it's a slightly different skill set but machining is required. so, part of the stimulus, though, david, allowed for us to reconfigure our training system and it makes something called no worker left behind where people are trained for specific emerging sectors in the economy. so you have a skills gap, that has to be filled, the stimulus helped us to do that. and we have an economy that's in the middle of a massive transformation. so, both need to happen. you need to stimulate the new technologies and you need to train the workers. >> governor romney, what about this jobs package from the president who says in effect we need more stimulus, additional stimulus to specifically help the private sector start hiring again. >> well, i think first of all, he's admitting what he put in place at the beginning of the year almost a trillion dollars, of stimulus spending, hasn't
done what it was intended to do. he predicted if they put in place that bill that they would be able to hold unemployment at 8% or below. it's gone to 10%. that's what they said would happen without their bill of it. so it was failure. now they are trying to change it. it's a year and obviously that's an extraordinary failure. secondly the right course here is not to create a new stimulus but to fix the one they passed. so let's take that money that's been allocated all sorts of government programs that aren't necessary and not growing the economy, and let's instead focus that on efforts that will create jobs. an investment tax credit, allowing business to expense capital expenditures. reducing pay roll tax. these will get jobs growing immediately. and the t.a.r.p. money, the t.a.r.p. money that's being paid back, don't put that into more government. give that back to the investors, give it back to pay back the debt. get the debt off the books. we have to show the world we're not going to keep growing government and borrowing more money. pay back what's been borrowed.
>> you heard dr. romer say look, we've got to grow the economy before we start attacking the deficit. and you also hear from inside the white house, wow, all of these calls by republicans to deal with the debt, where were they when george w. bush was president. what do you say about that? what the priority ought to be. >> i think the priority ought to be get rid of the agenda. i hear the agenda over and over again from business people. congress is stalled on health care. i favger universal health care, everyone does in this country. but washington is killing job growth not -- and then trying to stimulate it small scale. how much does it cost to bring in a new employee in. we don't know. we don't know what the health care will be, we don't know what the tax scheme will be. washington is at the root of many of the problems of why you should hire here. the ceos are hiring in brazil, in russia, china. why are they hiring in those countries? because it's steady, we know what to get from the government, it's a rather -- it's rather quizzical we know what the
communists will give us but not the capitalists. >> this is an interesting question about our role of the world, our commitment to capitalism and in corporate america dr. greenspan, the notion of where is the certainty. washington is a big question mark now when it comes to climate, health care policy, a lot of businesses saying look, we don't know what's coming. there is no impetus to grow, to expand, to invest. >> that's the key problem. investment occurs when you have a stable economy. and when you can foresee what's going on in the future. because remember, you make a risky investment which may have ten years, 15 years life to it. unless you have some semblance of a notion as to what is out there, you're going to be reluctant to invest. that is key. i agree with jim in this respect. i think it's very critical that we get the uncertainties out of the system. >> you think additional stimulus
for jobs makes sense at this stage? >> no. i think what is missing in this whole discussion is where i presume to be the major source of the recovery, and that is the remarkable increase in the amount of stock market wealth that has occurred in the last six to nine months. people think stock prices are just paper profits. they are not. they create real purchasing power and most importantly, they create a fluidity into the financial system which is the reason why even though banks are not lending freely at this particular stage, they are solvent and the problems that we had six to nine months ago have disappeared because essentially $5 trillion worth of increased equity is pouring into the economy, and you can see it in the retail sales figure.
401(k)s increased by half a trillion dollars. >> yet the president says wall reet's to blame. he said it in his radio address. is that the wrong message? >> the problem is there is an issue, namely, this is a bivarieth economy. >> what does that mean? don't try to slip that in here. we can't understand something. >> my old -- >> old habits. >> i can't break the habit. look, there are two economies here, which is very unfortunate. the economy is being driven in a positive sense by big business and wealthy individuals. small business, small banks, and a very significant part of the unemployed are not prospering. i'm particularly concerned about where the job machine is relevant to small business, which are doing miserably. they have great difficulty financing and great difficulty in creating jobs.
>> governor granholm, how do you see this divide? what's been boiled down to wall street versus main street. because the president does have a problem. wall street's gotten healthy again, main street has not. and you're seeing it. main street all over your state. >> and this, i mean, so much of that has to do with the fact that there is so little access to credit. both for homeowners who want to refinance, and for small businesses. this issue of the tightening down of credit requirements on the part of banks have made them extremely pair annoyed. and they are -- >> i thought we wanted more oversight. i mean, i thought this was a good thing. >> i think that -- yeah, but to then block, you give the banks all of this money and block it so much that the money can't go out and the whole purpose is to get the money out the door. that's what the president is talking about. we have so many auto suppliers who want to diversify into defense, into green and clean technology products. but even though they had great
credit and they have always made pay roll and always made their bank loan, they cannot get a loan. that is wrong. so that's the next step that the president intends to address. >> governor romney i've spoken to bankers who say look, we have programs in place, this was at a very healthy bank. we have programs to lend. there isn't the demand out there because small businesses don't want to take a risk right now on the venture, on the ultimate enterprise that they would want to get money for. >> well, you still have in this country a lot of concern, a lot of fear. we vacillate in economic cycles between the euphoria and the optimism of the up cycle. there is fear going on. one of the reasons is that the government is attempting to play such an extraordinary control roll-over various sectors of the economy that people are very, very concerned. that's certainly true in health care. people see the government potentially changing the rules there, taking over almost one fifth of the economy.
that scares them. the financial services sector has to be terrified after what they saw over the weekend come from congress. so as a result people are pulling back. what you have to do is free the private sector to do what it always does, which is to recover from this recession, to start hiring people again, and providing the opportunities that particularly those in small business desperately need. >> let me turn to another question about the role of government, the role of the federal reserve. dr. greenspan, paul krugman, economist for the new york times wrote this week. there's also he wrote i believe a question of priorities, the fed sprang into action when faced with the prospect of wrecked banks. doesn't seem concerned about the prospect of wrecked lives. that's what we're talking about, the sustained high unemployment and the forecasts a recipe for immense human suffering. millions losing their savings and home, millions of young americans never getting their working lives started because there are no jobs available when
they graduate. if we don't get unemployment down soon we'll be paying a price for a generation. does the fed have more to do? >> i think the fed has done an extraordinary job and it's done a huge amount. there is just so much monetary policy and the central bank can do. and i think they have gone to their limits at this particular stage. and you cannot ask them to create more than is physically possible. they stopped what essentially was a major financial collapse by interposing sovereign credit for private credit for commercial paper, for essentially blocking a number of problems which emerged, especially in conjunction with the treasury the so-called t.a.r.p. program where they put capital into bafrnks. i thought at that point was essential. the difficulty is there is a
limit and the federal reserve does not, in fact, pull in all of the stimulus it's put into the economy, then down the road is inflation. it's a long way down the road and it's not immediate. but the question is, you cannot ask a central bank to do more than it is capable of doing without very dire consequences. >> are you worried about the fed's independence? what do you think the consequences of some of the legislation on capitol hill are now? >> if in fact specifically they take away the amendment that was passed in 1978 which prohibited the gao, the general accounting office, from ordering monetary policy, if that is removed i think that will very significantly compromise federal reserve independence and what you will be getting is a monetary policy more dedicated to political short-term considerations, not to the longer term considerations which the federal reserve was
specifically constructed to do. >> jim cramer, let me ask you about something on a different level, the u.s. role in the world, there are a lot of countries who are down on the u.s. right now as we've talked about. and the president talked about the role that the u.s. plays in the world. he gave a speech accepting his nobel peace prize during which he said this. i face the world as it is, and cannot stand idle in the face of threats to the american people. for make no mistake, evil does exist in the world. and yet recently, just last week when he rolled out his plan for afghanistan, he said there are limits to what the u.s. can do to factor in national security. this is what he said then. >> we fail to appreciate the connection between our national security and our economy. in the wake of an economic crisis, too many of our neighbors and friends are out of work and struggle to pay the bills. so we can't simply afford to
ignore the price of these wars. >> the question is can we do both? can we stand up to evil and also be mindful of the balance between an economy in trouble and wars that are being fought? >> we tried it in the 60s, didn't quirk so well. that's the guns and butter lyndon johnson period. i feel very strongly that the notion that we have enough money to do all of these things is also at the root of some of the paralysis that's in business. people talk about the deficit as if it's, well, there's nothing we can do. obviously if we're going to finance wars around the globe we have to cut back or raise taxes. your questions to dr. romer were right. taxes have to go up if we're going to continue to finance and the rest of these countries are not going to help. >> governor romney, the auto companies, going through bankruptcy and yet we find out this week that in fact the chinese are buying more cars for the first time, more than americans. >> we can compete around the world, no question about that, david. we have the capacity to do that
t american workers are the best in the wefrld, our technology is at the leading edge. america long term can be the powerful economic engine it's always been. but the real athlete is if we don't take action to rein in government spending and the compensation levels of government workers, you saw average government workers now making $30,000 a year more than the average private sector worker. these kinds of excesses and the massive deficits that government is putting in place over a trillion dollars a year for these coming several years, this threatens our long term viability because it suggests that we could have run away inflation and the fed and the federal government are going to have to rein in, pull back from the excesses. republican and democrat. it's not partisan. it's a growth of government issue, it's got to stop or america's future could be very much in jeopardy. >> dr. greenspan, where are we next year? where is unemployment in
december next year? >> it's going to be lower. you know, we're going to get a special bonus nobody expects in the fact that the bureau of sen suls announced that it's going to employ 792,000 workers by april. that's a big -- not huge but it will take several tenths of a percent off the unemployment rate. the unemployment rate will be significantly lower a year from now. but, between now and then, largely because of people coming back into the labor force, almost irrespective of how much employment expands, the unemployment rate will probably stay high. i don't think it will stay at 10%, but it's not going down very quickly or very dramatically. >> talking about the role of the fed. what about interest rates? do they have to stay where they are? >> they can't. in a sense that over the very longer term, it's pretty obvious
that as the the economy begins to pick up and as loan demand begins to pick up, remember, loan demand has been very dull because businesses are very heavily liquidating inventories. that's coming to a halt. when that happens, loan demand will come back, and the pressures on short-term interest rates will begin to grow. >> governor granholm, i want to give you the last word. a question that brings this home. what is the psychological impact on our country of this kind of jobless rate and the effects of this kind of recession? you're seeing it every day up front. >> there is no doubt that people are angry and frustrated and certainly there is a pullback on spending as a result. but david, you know, i think that we've got to, as leaders, be projecting confidence in the steps that we are seeing. and truly, there have been -- there has been progress. dr. romer said in january we
were losing 700,000 jobs a month. last month it was 11,000. so there is progress. there are signs of hope. we cannot be all about doom and gloom. so i'm confident and i'm optimistopt mi optimist optimistic. up next, war and peace. president obama accepts the nobel peace prize while leading a nation at war and talks about the lessons of martin luther king jr. we'll hear it on this program on employees everywhere are sending out an sos. who can help put their retirement plan back on solid ground... protect their savings... and guarantee their income throughout retirement? as a leader in your company, who can you call to help get retirement right? for solutions that redefine retirement, prudential is the rock you can rely on.
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we're back with our "meet the press" minute. in 1964, a young 35-year-old dr. martin luther king jr. was awarded the nobel peace prize for his work to bring about civil rights and equality through civil disobedience and peaceful means. following year he appeared here on "meet the press" and spoke about the importance of nonviolence as the centerpiece
of the civil rights movement. >> this is ned brooks inviting you to "meet the press." our guest today on "meet the press" suppress dr. martin luther king jr. who led the civil rights march. dr. king who was the winner of the nobel peace prize president of the southern christian leadership conference. >> dr. king, your movement has been distinguished for its nonviolent approach. but your people are under great pressure. how deeply do you fear the eruption of negro violence in pursuit of negro rights? >> i feel that we will continue to have a nonviolent movement and continue to find the vast majority of negros committed to nonviolence at least as the best tactical aproech and from a pragmatic approach the best strategy in dealing with the problem of racial injustice. when there is justice and the
pursuit of justice, violence disappears and where there is injustice and frustration, the potential for violence is greater. and i would like to strongly stress the point that the more we can achieve history through nonviolence the more it will be possible to keep the nonviolent discipline at the center of the movement. the more we find individuals facing conditions of frustration, conditions of disappointment and seething despair as a result of the slow pace of things and the failure to change conditions, the more it will be possible -- >> i have to interrupt. >> this week as president obama, the commander in chief of a nation at war received the nobel peace prize in oslo, he praised the nonviolent message of dr. king but confronted the struggle between the merits of peace and
realities of evil. it can lead a nation to war. >> i make this statement mindful of what martin luther king jr. said in this same ceremony years ago. violence never brings permanent peace. it solves no social problem, it merely creates new and more complicated ones. as someone who stands here as a direct consequence of dr. king's life work, i am living testimony to the moral force of nonviolence. i know there's nothing weak, nothing passive, nothing naive in the creed and lives of gandhi and king. but as a head of state sworn to protect and defend my nation, i cannot be guided by their examples alone. i face the world as it is, and cannot stand idle in the face of threats to the american people.
for make no mistake, evil does exist in the world. a nonviolent movement could not have halted hitler's armies. negotiations could not convince al qaeda's leaders to lay down their arms. to say that force may sometimes be necessary is not a call to cynicism, it is a recognition of history. the imperfections of man, and the limits of reason. >> and we'll be right back. ( music playing )
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